GST Caselaw

#GSTCase-77-Charges received for Storage of Agriculture Produce is Exempt from Levy of Tax (AAR-Rajasthan)

#GSTCase-77-Charges received for Storage of Agriculture Produce is Exempt from Levy of Tax (AAR-Rajasthan)

                                                                                                                                                                CA Arpit Haldia

 

Shubhlaxmi Cold Storage & Ice Factory (P.) Ltd. [2019] 103 taxmann.com 237 (AAR- RAJASTHAN)

 

  1. Query:

Whether charges received by the cold storage for providing service of storing of eggs, which is produce of rearing of animals/poultry farming in cold storage is exempted from payment of GST in terms of S. No. 24 of Notification No. 11/2017-CT (Rate) and S. No. 54 of Notification No. 12/2017-CT (Rate), dated 28.06.2016.

 

  1. Facts

Applicant is having a cold storage for storing of agriculture produce out of cultivation of plants and poultry eggs which are produce of rearing of life animals/poultry farming,

 

  1. Contention by the Applicant

Eggs are produce of live chicken farming and are not further processed. Hence their storage in cold storage is covered by above definition prescribed under the said notification and argued that service of storing fresh eggs should not be chargeable under GST. Applicant relied upon the judgement in the case of Shriji Ice Factory v. CCE [Final Order Nos. ST/A/50749-50750/2017 – CU(DB), dated 7-2-2017].

 

  1. Observation by AAR
  • Relevant Entry

Entry No. 54 of Notification No. 12/2017-CT(Rate), dated 28.06.2017 exempts Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of—

(e)                         loading, unloading, packing, storage or warehousing of agricultural produce;

 

  • Eggs are Agriculture Produce

Eggs are produced out of rearing of chicken (Poultry Farming) for food and as per definition of Agricultural Produce, any produce out of rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. Thus Fresh Eggs in shell on which no further processing is done are covered under definition of “agricultural produce.”

The Principal Bench of CESTAT, New Delhi in matter of Shriji Ice Factory (supra) has also held that “Storage and Warehousing services-Activity of providing cold storage facility for milk which is an ‘Agricultural Produce’ not leviable to Service Tax -Section 65(102) of Finance Act, 1994.

 

  1. Held

The charges received by the applicant for providing service of storing of “fresh eggs” in shell on which no further processing is done, which are produce of rearing of animals/poultry farming, are exempted from payment of GST in terms of Entry No. 24 of Notification No. 11/2017-CT (Rate) and Entry S. No. 54 of Notification No. 12/2017-CT (Rate), dated 28.06.2016.

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